Supreme Court Reviews Universal Service Fund Subsidy Challenge: Key Takeaways and Implications

Supreme Court to Hear Challenge to $8 Billion Universal Service Fund

The case could also affect how much power Congress can delegate to federal agencies.

WASHINGTON − In the heart of the Arkansas River Valley, when the COVID-19 pandemic threatened to sever the lifeline of internet access, librarians didn’t just stand by. Facing closed doors and social distancing, these community heroes innovated, mounting antennas on library rooftops to broadcast internet signals to those in need.

“We still do it,” affirms Misty Hawkins, the regional library director, highlighting the enduring commitment to bridging the digital divide.

For a significant portion of the rural population, where the median family income hovers below $46,000, the seven libraries provide a crucial, reliable internet connection through the Universal Service Fund (USF), an $8 billion federal programme.

Hawkins powerfully articulates the program’s impact: “Lives are being changed through the distribution of a computer, through a connection, or a person being able to have resume assistance, or being able to get their GED. That’s life changing and that’s whether or not they’re going to be able to put food on the table.”

the Supreme Court Case: A Deep Dive

Though, the very existence of this program is now under scrutiny. The Supreme Court is set to hear oral arguments challenging the USF, a program designed to ensure affordable access to telecommunications services for all Americans, particularly those in rural, high-cost areas, and low-income communities.

At the heart of the challenge is the question of how the USF is funded. The program is supported by fees collected from telecommunications companies, which are then passed on to consumers in the form of higher phone bills. critics argue that this funding mechanism constitutes an unconstitutional delegation of authority from Congress to the Federal Communications Commission (FCC), the agency responsible for administering the USF.

The argument centers on the “non-delegation doctrine,” a principle rooted in the U.S. constitution that says Congress cannot give away its legislative powers to other entities.Challengers claim that Congress has failed to provide sufficient guidance to the FCC regarding how the USF fees should be determined, thereby granting the agency virtually unchecked power to tax the telecommunications industry.

The Argument Against the FCC

Critics of the USF fees, including some telecommunications companies, contend that the FCC’s broad authority to set these fees lacks sufficient congressional oversight and violates the constitution’s separation of powers. They argue that the FCC essentially acts as a taxing body without the direct accountability to the public that elected officials possess.

As one challenger stated, the current system provides only a “semblance of accountability to the public.”

The justice Department’s Defense

The Justice Department,representing the FCC,counters that the agency operates within the bounds set by Congress. They emphasize that the FCC’s authority is not unlimited and that it adheres to the standards established by legislative action.

“The FCC ultimately decides, within the limits and standards set by Congress, the amount of the fee,” the department’s attorneys said in a filing.

The government argues that the delegation of authority to the FCC is consistent with numerous other laws that empower federal agencies to implement and enforce regulations in various sectors.

Delegation Similar to Other Laws

The Justice Department argues that the telecommunications law follows a delegation framework Congress has used in a range of areas, “including to prevent unfair competition, oversee the securities industry, ensure the safety of food and drugs, regulate labor relations and set air-quality standards.”

The administration points out that tax statutes, especially those regarding presidential authority to impose tariffs, have historically lacked the specific details challengers deem constitutionally necessary.

However, a 2022 Supreme Court case, challenging President Biden’s efforts to curb greenhouse gas emissions, has cast a shadow on the extent of federal agency power. The court limited the authority of federal agencies, asserting that regulations with major economic or “political significance” must have clear congressional approval.

Adding to this, in 2024, the court overturned a 40-year precedent that gave deference to an agency’s interpretation of a law if it was “reasonable.”

Tide turning on `non-delegation doctrine’?

Historically, the Supreme Court has rarely struck down laws based on the “non-delegation doctrine,” doing so only twice in 1935 during President Franklin D.Roosevelt’s administration.

In 2019, a divided Supreme Court upheld the existing standard, requiring Congress to provide only an “intelligible principle” for agencies to follow. This decision, a 5-3 ruling, saw dissenting opinions from Chief Justice John Roberts and Justices Neil Gorsuch and Clarence Thomas. Justice samuel Alito, while siding with the liberals, expressed openness to revisiting the issue.

Since that ruling, Justice Amy coney Barrett has replaced Justice Ruth Bader Ginsburg, potentially shifting the court’s ideological balance on this issue.

Communities are at the other end of the funds

The stakes are high for communities like those served by Misty Hawkins’ libraries. She worries that a ruling against the USF could severely impact her budget and services.

Her library system has received $381,395 from the program in the past decade, nearly matching its annual budget. Without this funding, the library would struggle to maintain essential equipment and services.

“There’s not a day that goes by that I don’t look at our budgets, saying `What could go if it has to?’” Hawkins said, highlighting the potential cuts to online tutoring, legal resources, and other vital services. “There are real people, real families, real communities that are at the other end of these funds.”

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How might a ruling against the USF impact the ability of federal agencies to implement programs similar to the USF in the future?

Supreme Court to Hear Challenge: Interview with Legal Analyst, Dr. Evelyn Reed

Archyde.com – March 25, 2025

Archyde: Dr. Reed, thanks for joining us today. The Supreme Court is set to hear a case that could substantially impact the Universal Service fund. Can you give us an overview?

Dr.Reed: Certainly. Good to be here. The Supreme Court is reviewing a challenge to the USF, an $8 billion program designed to ensure affordable access to telecommunications services. The core issue revolves around the delegation of authority from Congress to the FCC in determining how this fund is financed.

Archyde: Could you elaborate on the specific legal arguments being presented?

Dr. reed: The challengers argue that the FCC’s role in setting fees for telecommunications companies, which ultimately impact consumers, represents an unconstitutional delegation of legislative power. They are citing the “non-delegation doctrine,” claiming that Congress hasn’t provided the FCC with enough specific guidance, essentially allowing the agency to tax the industry without sufficient oversight.

Archyde: what’s the Justice Department’s counter-argument, and what precedent are they citing?

dr. Reed: The Justice Department, representing the FCC, maintains that the agency operates within the boundaries set by Congress, highlighting that the FCC’s authority is far from unlimited and subject to legislative standards. They point to the long history of federal agencies implementing regulations in various sectors like environmental protection and food safety, arguing this is a well-established delegation framework.

Archyde: The article also touches on the potential impact of challenges to the non-delegation doctrine. How has the court historically handled this concept?

Dr. Reed: Historically, the Supreme Court has rarely struck down laws based on the “non-delegation doctrine” – remarkably, only twice. However, recent shifts in the court’s composition, and prior cases which limited agency authority, have made the outcome of this case quite uncertain. Decisions on the non-delegation doctrine have been quite rare, though some justices have expressed interest in re-examining it.

Archyde: How meaningful is this case beyond the USF itself?

Dr. Reed: This case has the potential to reshape the balance of power between Congress and federal agencies. If the Court sides with the challengers, it could limit the scope of authority delegated to agencies across the board. This could lead to considerable restructuring and possibly require Congress to be much more specific regarding agency mandates in other areas.

Archyde: What are the potential consequences for communities reliant on the Universal Service Fund?

Dr. Reed: The stakes are high, especially for rural communities and low-income families who depend on the USF for essential services like internet access, online education, and telehealth. A negative ruling could lead to reduced funding, potentially impacting critical resources and widening the digital divide.

Archyde: Considering the changing composition of the Supreme Court, how do you see the court leaning in this case?

Dr. Reed:That is a very challenging question. Several factors make it challenging to predict reliably. Because there have been indications of interest in revisiting the non-delegation doctrine, the outcome won’t be known until the decision is released next year.

Archyde: Dr. Reed,in your professional opinion,what will the most impactful ripple effects be if the USF is changed?

Dr. Reed: The ripple effects of altering such a pivotal fund would impact how efficiently federal agencies operate in general. Considering the digital world, it would have significant impacts on the American population. I encourage our readership to consider how programs such as the USF can and do improve the lives of others. What is your opinion? Would you want to see any changes made to the USF?

Archyde: Thank you, Dr. Reed, for your insights.

Dr. Reed: My pleasure.

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